Written by Julia

Modified & Updated: 21 May 2024

Sherman Smith

Reviewed by Sherman Smith

Much of global trade is complex. It comprises many financial terms and regulations unique to specific geographical areas. Therefore, it is more challenging for companies to conduct commerce by keeping abreast of all the relevant developments. To help solve this issue, blockchain technology is emerging as an alternative. It provides a digital marketplace for supply chain interactions. Read on, if you are interested in trading with Yuan Pay Group.

The Difference Between Bitcoin and Ethereum

Bitcoin and Ethereum are two cryptocurrency networks. Both have seen rapid adoption in recent years based on their different goals and application-specific properties. This article explores the differences between Bitcoin and Ethereum from a technical proficiency level. It also compares the broadened use cases that differentiate these cryptocurrencies despite their similarities in technical architecture.

With Bitcoin and Ethereum, there is no need to trust or rely on one central authority. These cryptocurrencies also greatly simplify or eliminate the potential for censorship. To maintain some semblance of decentralization, Bitcoin and Ethereum use a process called “mining.” Now that we’ve covered their similarities, let’s discuss the differences between Ethereum and Bitcoin.

Proof of Work vs. Proof of Stake:

The first difference is that Ethereum does not rely on proof of work. It does not have miners who secure the network by validating transactions and solving complex mathematical puzzles. Instead, Ethereum relies on a trustless approach called “proof of stake.”

In Bitcoin’s proof-of-work process, there is no equal distribution of the block rewards. This means that all rewards go to those with more hashing power. It is against what many people perceive as an ideal form of distribution. Therefore, when miners compete for block rewards, they face a higher risk of centralization.

Alternatively, in the Ethereum network, you have something called ‘proof-of-stake’. In such cases, a validator is used to confirm the amount of money invested in the cryptocurrency. Most block rewards in Ethereum go to the miners. However, a certain percentage goes to validators. So as long as you are able to submit a valid block during that round, you will get a reward.

Ethash vs. SHA-256:

The process of mining Ethereum blocks is also different from Bitcoin. For Bitcoin, cash and SHA256 is used to validate nodes. Alternatively, Ethereum miners use a proof-of-work algorithm known as ‘Ethash’. This algorithm is challenging to compute but easy to verify. In comparison, Ethash prevents the usage of ASICs, requires a GPU or CPU, and more resources than SHA256.

Despite being more complicated, Ethash allows miners with relatively modest hardware to compete with those who have access to better equipment. This can give them an advantage over other block rewards.


Ethereum’s scripting language supports functional programming. This makes it possible to create many different blockchain applications for various purposes. For example, the Bitcoin network stores blockchains for financial transactions. However, there is no means by which you can program on top of it.

You could use Bitcoin as an alternative to fiat money to pay for goods and services. On the other hand, Ethereum can handle a higher volume of transactions than Bitcoin. Furthermore, the development team claims this number may reach a million transactions per second with sharding implementation.

There are also lower costs for executing smart contracts on the Ethereum blockchain. This is because the Bitcoin blockchain requires additional fees for all operations. This is due to the different types of scripting language used in each network.

Smart contracts:

Smart contracts allow the performance of credible transactions without third parties. It also allows for low-cost business logic (e.g., escrow, affiliate marketing, pay-per-use insurance, etc.) and consumer protections like those found in traditional contracts.

The Ethereum blockchain supports smart contracts, which can be written using a Turing complete language (the Solidity programming language). Furthermore, it can be compiled into byte code for Ethereum Virtual Machine (EVM).

On the other hand, the Bitcoin blockchain has a restricted scripting language. The majority of use cases you find are for financial transactions only. In short, there is no feature of smart contracts on the bitcoin blockchain.


The scalability problem is one of the hottest topics in the cryptocurrency space right now. Moreover, it’s an issue that is fundamental to the design of these decentralized networks. These networks need to be capable of handling all transactions simultaneously. As a result, achieving scalable blockchains has been a priority for many companies and developers.

Ethereum plans to scale using sharding which means it will split nodes into a network of smaller groups called shards. Each shard will process its subset of transactions in parallel with other shards on the network. This approach has been tried and tested in different projects for many years. However, it still requires development and testing before people on Ethereum’s blockchain can implement it. In short, the Ethereum blockchain is way more scalable than the bitcoin blockchain. It’s just a matter of time before the Ethereum network becomes unbeatable.

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